- Daily Zen
China’s yuan has moved into the ranks of the top five world payment currency in November, with the value of cross-border deals settled in it more than doubling in 2014, global transaction services organisation SWIFT said on Wednesday.
The data comes as China is trying to make the yuan used more internationally in line with its standing as the world’s second-largest economy, while simultaneously keeping its value tightly controlled.
The yuan, also known as the renminbi (RMB) overtook the Canadian dollar and the Australian dollar by value to break into the top five as a world payment currency, according to a SWIFT statement. It climbed eight spots in less than two years having been in 13th place in January 2013. The yuan reached a new high share of 2.17 percent in global payments by value closing in on the Japanese yen, which has a share of 2.69 percent.
Over the last year, total yuan payments increased 102 percent, overshadowing the overall annual rise of 4.4 percent for all currencies, the statement added.
The US dollar, euro and British pound remain the top three world payment currencies. “It is a great testimony to the internationalisation of the RMB and confirms its transition from an ’emerging’ to a ‘business as usual’ payment currency,” Wim Raymaekers, Head of Banking Markets at SWIFT said in a statement.
China has set up various offshore yuan clearing centres with ten countries and regions and signed currency swap agreements with 28 central banks including eight new agreements signed with the People’s Bank of China in 2014. This was a significant driver fuelling the growth.
Compared to a year earlier, global yuan payments increased by 20.3 percent in value in December. The growth for payments across all currencies was 14.9 percent for the same period, according to SWIFT.
China will again make an attempt to press for the addition of the yuan in the International Monetary Fund’s in-house currency basket in a review later this year, and hopefully its G20 partners may be willing to listen this time round.
The key reason against its inclusion in the basket of yen, Special Drawing Rights, dollars, pounds and euro used as the IMF’s in-house unit of account, is that the yuan is not freely usable or convertible. However, that argument has been gradually debilitating as yuan offshore trading escalates.